Rachel Reeves, the Chancellor of the Exchequer, has indicated that economic growth must take precedence over net zero targets, creating a potential rift with Energy Secretary Ed Miliband and senior Labor figures who remain opposed to expanding the UK’s largest airports.
Speaking at the World Economic Forum in Davos, Reeves insisted that “the answer cannot always be no” to major infrastructure projects, as she outlined the Treasury’s support for controversial plans to build a third runway at Heathrow and expand facilities at Gatwick and Luton. After years of slow growth, she said, “When we say growth is mission number one for this government, we mean it. That means it trumps other things.”
Her stance threatens to alienate party heavyweights such as Sir Sadiq Khan, the mayor of London, and Andy Burnham, the mayor of Greater Manchester, who are strongly opposed to expanding the airport. Miliband, who has long championed climate initiatives and previously opposed a new runway at Heathrow, noted that net zero emissions were “unstoppable” but were moving “not fast enough”.
Reeves acknowledged the potential tension but criticized the approach of previous administrations, which she said often allowed important economic opportunities to be derailed by local resistance and political indecision. “Of course there are other things that are important, but growth must trump other considerations,” she said.
Having already imposed £42bn in tax rises last October to put public finances “under control”, Reeves sought to reassure businesses that they would not be back “for more” in the next financial statement. Emphasizing her instinct to “lower taxes, less regulation,” she was careful not to make firm promises about future tax cuts, but emphasized: “We will never have to go back and do a budget like this.”
Reeves also highlighted the departure of Markus Bukerinck, head of the Competition and Markets Authority, as evidence of the government’s determination to align regulators with a “pro-growth” agenda. Bokerinac’s successor, Douglas Gore, the former head of Amazon in the UK, is expected to reflect this priority.
To boost innovation and attract talent in AI, biotechnology and other high-growth sectors, Reeves revealed that ministers are “looking again” at the UK’s immigration rules. “Britain is open for business. We are open to talent,” she said, stressing the goal of making it easier for skilled workers to obtain visas.
The Chancellor’s strong support for growth beyond net zero comes amid increasing pressure on the government after a rise in government bond yields and renewed concerns about Britain’s economic outlook. Reeves is holding a series of meetings with business leaders and investors in Davos to rally support and promote the UK as a competitive global destination.
Although her comments may energize the business community by promising a less onerous regulatory environment and fewer tax surprises, they may also deepen divisions within Labor and prompt environmental groups to mount new opposition to large-scale developments such as the Heathrow expansion.